Skunkworks, Sikorsky and skinny jeans: Lockheed goes to South by Southwest

WASHINGTON — The annual South by Southwest festival held in Austin, Texas, is known for being a lot of things — a haven for indie rock, a hub for Silicon Valley types who want to prove their cool, and, if you listen to critics, a formerly hip event that has gone way downhill with an influx of corporate interests.

For those critics, the fact Lockheed Martin will spend part of the show, held this year from March 10-17, hovering in a plush helicopter above the grounds while discussing multi-million dollar deals probably won't change any minds.

But for the world's largest defense contractor, stepping out of its comfort zone is part of a broader revitalized strategy to reach out to the commercial tech industry. And as a result, Lockheed Martin Ventures, the venture capital arm of the company, is inviting companies aboard a Sikorsky S-76D to talk business.

The helicopter pitch is the attention-grabbing aspect here, and that’s by design as Chris Moran, Lockheed Martin Ventures vice president, attempts to relaunch the LM ventures group, which has been around for a decade.

Moran, who jointed the group six months ago after 35 years working for Silicon Valley companies, said the old version was fine for what it was meant to do, but missed out on the strategic benefits of joining up with start-ups early on — namely, getting access to technology that could improve the capabilities of Lockheed’s portfolio of products.

"The early fund was much more focused on later stage technologies but was really missing out on the real richness of the venture space," Moran explained. "Seeing new technologies in their earliest stage, seeing what fails and what’s successful, but also trying to see the whole landscape of things in the [areas] we’re looking for."

Like any venture capital fund, Moran’s group is looking for small firms they can invest in and claim a percentage of the ownership. But unlike private VC funds, which are hoping to see dollar value back on their investment, Lockheed wants intellectual property it can apply to defense projects.

"We seek a relationship with a company that could take a form of collaboration, a joint development, maybe even teaming together to submit a proposal for a government contract," Moran said. "And usually the company we're talking about is largely commercially focused, so if we ask for rights in the defense domain, they are generally amenable to that. It isn’t granted in every case but sometimes exclusivity, or right of first refusal, on opportunities in the defense space is something we could seek."

Moran now has roughly $100 million to play with, and is keeping an open mind on where that money might go. But he does have some specific areas of interest, including advanced materials and manufacturing, artificial intelligence and machine learning, autonomous systems, data analytics, energy systems, space technologies and the infamous "Internet of Things" — all areas that tech companies at South by Southwest might bring to the table.

"We’re on the tail end of the big data analytics wave, but there are still new companies being created there," Moran said. "You’ll see a lot of companies in the space area — low Earth orbit constellations, space sensors, a variety of space missions, robotics — there are probably 50 or more companies in that area that have come up the last few years."

A big focus Moran expects to see at the event are companies associated with autonomous driving and vehicles, a major focus for the commercial tech sector at the moment. Innovations in the sensors, controls, radar and optical imaging technologies needed for a car to navigate a busy street safely could also apply to Lockheed products, especially in light of a major push for autonomous technologies in the Pentagon.

Which brings it back to the helicopter. Moran is upfront that the idea of bringing inventors up on the S-76D — outfitted with the nicest seats and an HDTV for presenting PowerPoint slides — and having them pitch while flying around is a gimmick meant to make Lockheed stand out from the many, many companies who will be represented in Austin.

But it’s a pretty good gimmick, one which has led to 40-plus companies responding to the invitation. Because of timing issues, only about 10 of those will actually get to go up in the helicopter, but the rest will still get meetings with the Lockheed team in a more traditional manner.

The last two years of the Obama administration saw the Pentagon, under then-Secretary of Defense Ash Carter, launch a number of initiatives to try and gain access to the commercial tech sector. Those have met with limited success, in part due to concerns from the tech sector about working with the government after the Edward Snowden disclosures.

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For his part, Moran says Lockheed has not encountered issues when trying to work with commercial firms, noting "they know who ware, they know what we do, so there’s no surprise what I’m going to talk to them about."

Aaron Mehta is the Senior Pentagon Correspondent and Associate Editor for Defense News, covering policy, strategy and acquisition at the highest levels of the Department of Defense and its international partners.